The GBP/USD trades towards the top of a 1.9760/80 range this morning, buoyed by a generally softer USD in early Asia and JPY weakness, with the GBP/JPY climbing from 238.65 to test 239.00. The hourly technical studies are also highly oversold this morning in Asia, which will provide support, as they unwind.
The Cable is poised above daily range support at 1.9750/60, with the 38.2% of this year's range at 1.9770; there are stops below 1.9750 and a close below targets a move to 1.9600. People are expecting offers at 1.9815/25 to cap the bounce in Asia.
The UK press carry stories on the BoE Inflation Report yesterday, and unanimously favour a rise to 5.75% in the coming months, with the continued risk on the topside, as Governor King stressed that "the main risk is that businesses become more confident of their ability to raise prices and in turn pay higher wages". This stance should provide underlying support for the GBP. The Cable trades 1.9775/78.
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